" Trump Tantrum" What SBI Say? Pre Market Report, Analysis Nifty & Bank Nifty 15 Jan 2025, Range

Summary

In this video, the impact of the Indian Rupee's depreciation is discussed, particularly with the introduction of the term 'Trump Tantrum' by the State Bank of India (SBI), distinguishing it from the 2013 'Taper Tantrum.' The analysis highlights that the rupee has historically performed better under Republican US presidents. The report also addresses oil prices, foreign capital inflows, and domestic investment habits. Nifty and Bank Nifty market trends are examined, showing short-term volatility, key support and resistance levels, and potential market movements. Viewers are cautioned to approach the market cautiously as global and local economic data could influence short-term trends.

Takeaways

• 😀 The rupee has been depreciating recently, and the State Bank of India (SBI) coined the term 'Trump Tantrum' to describe the current volatility in the currency market.
• 😀 The term 'Trump Tantrum' refers to the short-term effects of market instability during the presidency of Donald Trump, similar to the 2013 'Taper Tantrum' under the U.S. Federal Reserve.
• 😀 SBI argues that the current rupee depreciation is a temporary phenomenon, unlike the previous 'Taper Tantrum' which had a lasting impact on India's economy.
• 😀 Historical data shows that the rupee tends to perform better under Republican U.S. Presidents than under Democrats, with the rupee remaining stable under George Bush and Donald Trump.
• 😀 Despite India's inclusion in the JP Morgan Bond Index and cheaper oil imports from Russia, the rupee has weakened significantly under Joe Biden's presidency.
• 😀 Oil prices remain in a comfortable range for India, between $60 and $80 per barrel, with expectations of a supply glut driving future price reductions.
• 😀 According to SBI's report, most Indian savings are still in bank deposits (45%), with mutual fund investments, like SIPs, being relatively low (8.4%).
• 😀 SBI's report provides assurance that Indian people's saving habits are not as extreme as some investors fear, and the country is not experiencing a major shift away from traditional savings methods.
• 😀 In the Indian stock market, FII (Foreign Institutional Investors) were net sellers, while DIIs (Domestic Institutional Investors) were net buyers, indicating a mixed sentiment across sectors.
• 😀 The Nifty and Bank Nifty indices experienced volatility, with the Nifty showing signs of potential upward movement if it breaks key resistance levels, while Bank Nifty struggled to hold higher levels due to overall market weakness.

Q & A

What is the 'Trump Tantrum' as referred to by the SBI report?

The 'Trump Tantrum' refers to the short-term volatility in the Indian Rupee (INR) caused by the presidency of Donald Trump. It is believed to be a temporary phenomenon, unlike the 'Taper Tantrum' of 2013, which was driven by fears of reduced liquidity in global markets after the U.S. Federal Reserve's announcement to cut its quantitative easing.

How did the Indian Rupee perform during different U.S. presidencies according to the SBI report?

According to the SBI report, the Rupee has generally performed better under Republican presidents. During George Bush's presidency (2000-2008), the Rupee was stable at 40-50 INR/USD. Under Obama, it depreciated from 50 to 68 INR/USD. During Trump's presidency, the Rupee remained relatively stable between 64 to 74 INR/USD. Under Biden, despite favorable factors like oil from Russia, the Rupee dropped from 73 to 86 INR/USD.

What was the 'Taper Tantrum' in 2013, and how did it affect the Indian Rupee?

The 'Taper Tantrum' occurred in 2013 when the U.S. Federal Reserve announced it would reduce its quantitative easing, creating fear about a reduction in market liquidity. This led to a significant sell-off in global markets, including India, where the Rupee depreciated from around 50 INR/USD to 68 INR/USD due to India's widening current account deficit and rising oil prices.

What factors are helping to stabilize the Indian Rupee according to the SBI report?

The SBI report highlights two main factors stabilizing the Rupee: capital inflows from India's inclusion in the JP Morgan Bond Index and relatively stable oil prices. Additionally, the forecasted oversupply of oil is expected to keep prices in a comfortable range for India, further supporting the Rupee.

How is the Indian population saving and investing according to the SBI report?

The SBI report reveals that while the Indian population's savings are not as heavily invested in the stock market as feared, a large portion of new investments is still going into bank deposits (45.2% of new investments). Mutual fund investments, including SIPs, are relatively low at 8.4%, suggesting a more conservative approach to savings.

What were the major market movements on January 15, 2025, according to the transcript?

On January 15, 2025, the Indian stock market saw a positive trend in sectors like banks and FMCG, with 70% of stocks closing in the positive. Foreign Institutional Investors (FIIs) were net sellers, while Domestic Institutional Investors (DIIs) were net buyers. In the U.S. market, the Dow Jones, S&P, and NASDAQ showed minimal movement, with a focus on consumer inflation data.

What does the technical analysis suggest about Nifty and Bank Nifty?

The technical analysis of Nifty suggests a consolidation phase with resistance at 23,350 INR and support at 23,000 INR. If it breaks 23,350, an upward movement toward 23,500 is possible. For Bank Nifty, it formed a bullish pattern but remains below key moving averages, with support at 48,500 INR for a potential bounce. If it drops below this level, further weakness is expected.

What is the significance of consumer inflation data for U.S. and European markets?

Consumer inflation data for both the U.S. (released at 12:30 p.m. UK time) and Europe (released at 1:00 p.m. France time) is significant because it provides insights into the economic health of these regions, potentially influencing global market sentiment. The U.S. data, in particular, is expected to have an impact on stock market movements due to concerns over inflation and its potential impact on future Federal Reserve policy.

How did the oil price forecast affect market sentiment?

The forecasted oversupply of oil in the coming years, with prices expected to fall to around $74 per barrel in 2025 and $66 per barrel in 2026, has contributed to a more positive outlook for India's economy. Lower oil prices help stabilize the Indian Rupee and support the market sentiment, as they reduce the cost of imports and the current account deficit.

What does the options data suggest about Nifty's potential movement?

The options data suggests that Nifty is likely to remain in the range of 23,000 to 24,000 INR. The maximum open interest on call options is at the 23,000 strike, with the highest put option open interest at the 23,200 strike. A decisive break from this range could lead to a directional move, either upward or downward.